10AM Hour: Nvidia CEO Jensen Huang’s Affair with Alleged Chinese Spy, Future of the AI Trade, Gwyneth Paltrow on OpenAI Investment 11/9/26

0:00With the Discover Cashback Card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S.

0:39and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash market update podcast or find Schwab Market Update wherever you get your podcasts. Good Monday morning and welcome to Squawk on the Street. I'm Sarah Eisen with Carl Cantini and David Faber. We are live, as always, from Post 9 of the New York Stock Exchange. Stocks are moving higher in early trading as the S &P comes off its worst week since April 2025, with tech bouncing back after an nearly 5 % fall for the Nasdaq 100 last week.

1:13It was a rough one. We'll talk to Citigroup Scott Kronert about whether the worst is over for the market into year-end. Plus, the spy scandal rocking Silicon Valley and beyond. NVIDIA shares are getting hit hard as the company's board opens an investigation into CEO Jensen Huang's relationship with an alleged Chinese spy. We're going to talk about Huang's future as one of the stars of the AI revolution and what it all means for shareholders. And later, do not miss an exclusive with Goldman Sachs CEO David Solomon, live from the firm's Alternative Summit right here in New York. But, guys, in light of the Jensen-Wang news and just how high the stakes are, I thought I would take a look at the race between the U.S.

1:54and China, which we talk about, which we hear about from all the executives we hear about in Washington as well, given these spy allegations that she was a Chinese spy. So we put together a few charts here that shows where we are, the U.S. versus China, in this very high-stake race. Here's the global semiconductor sales overall. And this is third quarter of 2026. So it's a snapshot of the latest. And what it shows is there's a lot of demand for semiconductors overall. The U.S. is still growing faster, almost 200 percent in the third quarter. But China is growing fast to 125 percent increase in terms of global chip sales.

2:33In other words, what they're buying. Here's a percentage to show you about the about global chip sales overall. all. Basically, the U.S. consumes about 30 percent of them. China is 24 percent. So those are, you know, two big dominant players. A big part of the reason here is because the U.S. builds a lot more data centers. I mean, and that has been a huge story, is the data center built in the U.S. Why? Because U.S. companies compete and there's a lot of capital that goes into building data centers. And you can see the darker the color there, the more data centers there are. That's what you need to know.

3:07U.S. dominates. China, you know, has some dark corners as well, but they also have a different strategy when it comes to data center, right? They build this more, you know, centralized compute power stations where it's not a bunch of private companies like that we have in the U.S., the hyperscalers racing to compete against each other. You're saying it's more controlled by the government because it is interesting to note that in certain industries, they have incredible competition. For example, EVs. I forget the number of car companies in China right now, Sarah, but it's some astronomical number or at least a lot more than you'd expect.

3:39And they compete viciously. For sure. But not, you're saying, in this case. Well, I mean, they have, look, China has built fewer, larger, more centrally coordinated computing hubs, and they're trying to make their own chips. Right. I mean, we have the access to the advanced chips. This is why the NVIDIA story is so fascinating, because this is our strategic advantage in the AI race is the access to these chips. Now, what's interesting is that China's strategy doesn't necessarily mean it's behind on the AI models. You know, if you look at some of these model, how they're compared in terms of how advanced they are, China's catching up.

4:17And whether it's because they are able to use distillation to learn off U.S. models, right, or if they've just been more efficient, for instance. They have a lot more computer scientists than we do as well. You don't want to understate their actual abilities there, in fact. But you're right. I mean, on certain scores, the Chinese models have been seen as close. And there's obviously debate here as well about the use of the open models, given they're far, far cheaper than the frontier models from the likes of open AI and anthropic as well. But there is a belief that we're still ahead, to your point.

4:49We're still ahead. And obviously this gets back to the whole idea of the race, which is so central to the arguments made by those who are proponents for building more and more data centers that we have to stay ahead. We can't slow down because China is not slowing down. And they might have an advantage on electricity. I mean, they do have an advantage on electricity generation, transmission, large scale infrastructure, construction, their permitting process. You better believe it's probably a lot easier than ours, especially now after the midterm elections. And they also do they dominate in one one particular area.

5:20which is robotics, like the physical AI. And that's something that, you know, the U.S. has potential catch up. But you cannot compete with U.S. investment. I mean, if you look at a comparison of how much we're investing all these companies versus China, that's the chart. Now, it doesn't necessarily mean we're going to always be ahead, but that is key. Which then does come back to the power. This is private investment. Right. Right. It doesn't include any kind of government state involvement. I guess so. But, you know, that's part of the story. I mean, yes, they're investing state for sure, but not as much as we are.

5:54Right. OK, because, yeah, we know the government in China, obviously, is an important component. By the way, as our local governments, which often compete, it's a very different system, obviously, and often compete to get those companies there locally and offer all sorts of incentives as well. But to step back for a minute and given everything you're talking about here, of course, Jensen Wang runs the most important chip company in the world by far with the most powerful companies. that has been behind the AI revolution, the GPU being a key to it. And that's a problem. And that could be a real problem that he has had a relationship with the Chinese, alleged Chinese spy, Sarah, given that importance that he has and the importance of those chips, as you just said, potentially to the Chinese.

6:39His own chips as our strategic advantage. And he's been arguing that we should sell more chips to the Chinese. And he is also a huge proponent of open models. And he has a seat at the table. He was literally seated at the table with President Trump and Xi at the state dinner when they were there. I remember the pictures with him and his wife. He obviously has huge influential policy. So, yes, the national security implications, the financing implications, it's hard to, you know, overstate them. Yeah, that was the more conspiratorial game theory that's on right now. One was what information might they have been able to get to that regarded the president, given Wong's ties to the president.

7:20Yes. Not just about chip supply. And whether ultimately, I think, David, what you're suggesting is whether it was helpful for China in terms of this incredibly high stakes race between the U.S. and China. Because what they don't have is the access to the most advanced chips. And that is what the U.S. has. And that is NVIDIA. Let's dive more into this incredible story. The stock is getting hit this morning as the company's board says it's opened an investigation into the relationship between Jensen Wong and a woman who the intelligence community believes is a Chinese spy and who was reportedly passing information to Beijing.

7:52Wong addressed the affair in this memo to employees and the board, saying in part, I owe my family and all of you an apology. I was unfaithful to my wife. My actions hurt her and our children. There is no excuse for what I did. I'm deeply sorry. NVIDIA's board says in a statement, the board has confidence in Jensen and his leadership team and will provide further updates as appropriate. Our next guest has around two decades of overseas experience at the CIA in the operations directorate. Joining us this morning, Michael Baker, former CIA operations officer, current CEO of an intelligence and security firm, the Portman Square Group.

8:25He hosts the podcast, The President's Daily Brief. Michael, appreciate the time and the help today. Thanks. Thank you very much. I guess, you know, not trying to get over our skis, but given what we think we're going to be looking for, will your question surround NVIDIA's own security apparatus? Well, yes, it has to. And I assume that internally they're already staring at that and understanding what they've got and what's lacking in terms of their security protocols, particularly on their counterintelligence side. Look, and there's government agencies, particularly the FBI, they're doing their own investigation.

9:02And as you pointed out, NVIDIA has announced that they're going to do an internal investigation. That's what you would expect. But when you have a company that is even remotely engaged in sensitive or critical business operations, your security operations, your internal security operations and your counterintelligence element of that, they have to be incredibly persistent. You've got to be aggressive and they have to report directly to the C-suite, including the CEO. If there's not a direct connection between your global security and counterintelligence operations within your company to the C-suite, then it is relatively ineffective.

9:45One of the points you make is that in the playbook of Chinese espionage, this kind of example is classic. Is that what you're arguing? Oh, yeah. There is nothing new. No one should be surprised, I guess is what I'm saying, that the Chinese intel apparatus, the Ministry of State Security and their other intel elements, would target somebody like Jensen Plunk. It shouldn't shock anyone. And so, therefore, again, kind of going back to what that company should be doing, what other companies in that position should be doing, they should be aggressive in vetting all those foreign contacts, overseas connections, individuals who want to establish an engagement or contact a relationship with individuals within that company, whether it's a CEO or whether it's somebody down at the lower level.

10:32It could be someone who's responsible for cleaning the offices. The Chinese intel apparatus for decades has worked to collect, to hoover up all the intelligence, all the economic information, all the research and data, all the intellectual property that they can get their hands on, not just from the U.S., but throughout the West, because in part, speaking to what you were talking about in the earlier conversation, they know they can't match U.S. investment. So they have a head start, they jump start the research and development process in part. That's how they envision getting to the top of the food chain.

11:10You know, even earlier in the last conversation, we were talking about this very subject you're addressing here as well. at so many companies, obviously, you would imagine an intelligence operation that tells the CEO about questionable companies and or people just don't know, even though this is literally the most important company in the world, many could argue, whether that took place here. It's your expectation that it did or we simply don't know. And if it didn't, would it be a huge gap in what they're doing at NVIDIA? Well, I'll tell you this much. Once he started that relationship with this woman, with Alice Wong, the alleged.

11:46I can't believe I'm using the word alleged after all these years of working in counterintelligence with China. Once he started that intimate relationship, there were individuals within the Ministry of State Security getting promotions. There were parties going on, right? Because from their perspective, he's now compromised. And that's very important. They've set the hook. He took the bait, a classic sort of operation. Now, whether he wittingly or unwittingly provided information or was used wittingly or unwittingly as a point of leverage. And again, to what you were talking about, the idea of opening up A.I.

12:25and selling chips to China, because that was an important element of what they would likely try to do with him. That's all speculation. We don't know because the investigation hasn't publicly declared it. Maybe they don't know yet. I assume for sure. Of course, he's going to cooperate at this stage. But I can tell you this much. This was a major score for the Chinese Intel apparatus. Why? What do you think they wanted and what do you think they got? I mean, I know we're speculating here, but what's the worst case scenario? Yeah, that's important to say that we are speculating. But look, from an Intel perspective, from an operational perspective, you want everything.

13:01You don't care. You want inside information as to plans and intentions, agenda for NVIDIA. You want information about his conversations with other tech leaders. You want information, to your point, about his conversations with the president. You want him to talk to you about, you know, policy, regulatory policy in the U.S. And you want to try to use him as an influence to get those chips sold to China. That's another, again, that's an element of it. But the bottom line is, from a Chinese perspective, they don't care. They'll hoover up everything and then they'll look and they'll say, OK, this is useful.

13:38And they don't have a firewall between their businesses. If you want to call it, you know, they really don't have a private business operation. They all have to answer to the MSS and to the CCP. If they want something, they will hand it over. So they'll look, they'll hoover up everything and they'll parse it out to wherever they believe it will help their own interests. Yeah. I mean, obviously, at the center of this as well is not just a question of intelligence, But the woman in question was a senior executive at a company called Megaspeed that may have been buying chips. Well, was buying chips from NVIDIA.

14:10But it's unclear whether they were going to Megaspeed, a Singapore-based neocloud, or whether they were ending up in China. I'm curious, Michael, does Jensen Wong, I don't even know the answer to this, whether he would have a security clearance of some kind. And, you know, what are our intelligence agencies thinking right now? Yeah, it depends on, I mean, I don't know. I would be speculating on NVIDIA's government contracts. If they're operating closely with the government through some type of arrangement, then yes, there would be individuals within NVIDIA, possibly including Jensen Huang, who would have their tickets, their top security or higher clearances.

14:50But the CIA is assisting. The FBI would take the lead on a counterintelligence concern like this. but there's there's a lot of questions to be answered at this point i'm glad nvidia says they're going to have an internal investigation that one is frankly not as important as what the fbi does um because they've got deeper abilities and connections and and they just know more but it is good that nvidia is having this and they're bringing in outside counsel that is important uh but look at the end of the day i guess i keep going back to the same thing that the chinese These intel operations have been doing this for decades.

15:29The cost to America and to our allies in terms of lost revenue, lost job opportunities, lost research and development, you can't put a figure on it. People have tried, but it's incalculable. Finally, Michael, we've been talking about the debate regarding China supply for a long time and just how different Jensen's view was from China Hawks' view and what they deserved and should get. I mean, this whole, whether we're talking about the sourcing at the Times or whatever, there's clearly a camp. This lays bare just how vicious that debate has been. No, absolutely. And again, look, the Chinese have understood for a long time.

16:12right much like after world war ii this is not a perfect example but japan decided okay we're going to be a manufacturing powerhouse that is how we're rising from the ashes that is how we're going to lift ourselves up in the world economy the chinese communist party looked around decades ago and said okay we're going to bypass that heavy lift and the cost of research and development in part i'm not i don't take away anything from you know the fact that they do have very talented scientists and engineers and all that. But there is there is no way to argue that they don't engage. They're the most persistent player in the world of intellectual property theft, economic espionage, whatever you want to call it.

16:54That's how they determined decades ago that they were going to get to that point where they believe it's the Middle Kingdom. Right. That means they believe she should be in particular. They should be in the center of the universe. Do we do it? Like, I know that there's a big meeting between Trump and she next week on the sidelines of AIPAC. But do we have any intelligence assets at the high levels, high levels of their AI revolution to find out what's going on there? Yeah, the key the key difference here is that in the U.S. And I know people are going to say, well, look, of course, look where he worked and spent all his time.

17:28Of course, you can say this. But it is absolutely true. The U.S. has a firewall between the intel community and our private sector, right, our businesses. The idea being that if we gather up a piece of intelligence as an aside from working overseas about a company in a hostile environment and it says, OK, look, this is what they're doing. The idea in the U.S. is you can't pass that to a specific company because that that kind of that sort of screws the pooch in terms of free markets and capitalism. And so forever, there's been this firewall that sits between the intel community and the private sector.

18:05That firewall doesn't exist in a place like China. They view their intel apparatus as being a part and parcel of their economic success. And so do other countries, to be fair. A lot of countries do that, including some of our allies. But in the U.S., no. When you're out working operations, you're not gathering intelligence for the benefit of a specific company. Michael, appreciate it. It's already getting so layered and we're obviously going to spend months talking about this topic. We appreciate it. Please come back. Michael Baker, former CA operations and CEO of Portman Square Group. All right.

18:43Here's our roadmap for you for the rest of the hour. After the break, we'll talk with Citigroup's Scott Kronert about whether last week's sell-off changes his bull case for the market into year-end or whether he thinks the worst is behind us. Plus, we'll have a lot more on this investigation into Jensen Wang. As NVIDIA shares are down about 4 % this morning, we'll have one analyst who says there are a number of key risks that shareholders need to keep in mind. And the next big test for the AI trade comes tomorrow when we'll get core weave earnings. The options market already pricing in a massive move.

19:12We'll get to that story. Vicks getting crushed here. Back to 21. Stay with us. With the Discover Cashback card, it's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to Discover. Terms apply. See discover.com slash 5 for details. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S.

19:58and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts. Traditional home security only alerts you after a break-in, and that's too late. SimpliSafe is changing that. Stop. This is SimpliSafe. Police are on the way. We don't just alert. We help stop crime before it starts. Plan starting around a dollar a day. Right now, get 70 % off your new system with professional monitoring at simplisafe.com slash SXM.

20:35SimpliSafe. Ahead of crime in real time. Outdoor deterrence plans start at$49.99 a month. Visit simplisafe.com slash licenses for alarm license information. All right, welcome back to Squawk on the Street. Stocks are recovering this morning after a brutal stretch for the bulls, which saw the S &P 500 post its worst week in more than a year and a half. But our next guest is sticking by his bull thesis into your end. Joining us now is Scott Kronert, head of U.S. equity strategy at Citi Research. You're not shaken by the midterm election results, the concerns about peak data center builds and infrastructure spend in the U.S.

21:10and what that might do to the market and the economy, Scott? Yeah, Sarah, I mean, I'd have to say, yeah, we're kind of shaken. There's a lot of moving parts to be considered here. But the market reaction thus far has in many ways been fairly extreme. You've taken the semiconductor space down pretty significantly with it, the NASDAQ. But what you've left with, Sarah, is two forces at work. One is valuations have come in dramatically in terms of what you're paying on forward earnings for the growth part of the index or the S &P itself. But two, the earnings picture into 27 continues to look pretty solid.

21:46Combination of the two, we think, sets up for a better year end finish. Right. Does it does it change, though, where the leadership comes from? Well, so there's two pieces to this on a on a oversold rally basis. I think it does come back to semis, which are sort of the biggest industry group within the market. There you've seen valuations coming even more significantly. In many cases, we're looking at mid-single-digit four PEs. So I think you do need that part of the market to rebound. And that's going to align with, I think, some confidence that there is still a path forward in terms of data center build-outs on the heels of last week's election results.

22:26But the other piece of this is the broadening playbook, where we're looking at oil prices continue to tick a little bit lower. You've seen what's happened to 10-year yields. You look at the price action, even in the post-election days last week, it was pretty bifurcated. The broadening playbook is starting to work under the markets, under the surface. So the combination of the two forces sets up pretty well into year end. Now, whether we get to 8 ,100 is probably a bit of a stretch, but I think directionally, the playbook short-term looks pretty good from our perch. Scott, some of your peers on the strategist side are looking at what happens if, for example, back half of 27 AI CapEx gets cut 20 percent.

23:08That would have implications for semi-EPS and actually some implications for S &P EPS. Is that too dire a playbook to imagine? Carl, you have to imagine it. It's certainly out there in the scenario analysis that you have to consider, right? And so whether cooler heads really prevail and we do find a sort of an appropriate rules of the road going forward, I think will still remain to be seen. But we do have to keep in mind, though, is that increasingly we're seeing this CapEx playbook factor into how you're looking at GDP growth projections. So, you know, I think what has to get acknowledged in here is that there's an element where you do need to see the persistence of the AI CapEx spend into the out years continue alongside confidence that we're still looking at pretty decent economic underpinnings.

24:06It's encouraging that the market is up today. NVIDIA, I know you're not a single stock guy, Scott, but I feel like as a U.S. equity strategist, you've got to have a call on this. NVIDIA is down 5%. Obviously, Jensen's future hangs in the balance, and it affects companies like Microsoft and AMD and the NeoClouds and Anthropic and OpenAI. And the circular risk that we have been talking about for months now really comes into sharp focus. Do you worry about that as an overall market risk? Yeah, I think absolutely. When you're looking at the first or second biggest capitalization in the index, you have to, right, Sarah?

24:41But you know me, I tend to fall back and look at what are the fundamental underpinnings going forward here, short, intermediate, long term. Are they are they egregiously changed? I don't know that yet. So I think we can presume that we'll have to weather this storm. But fundamentally, I think the company's position in the ecosystem for the most part is unchanged. And so we just have to factor that in that. No question. No question. Sentiment is an ongoing issue that we're going to have to contend with. And I think one of the forces that increasingly we're getting sensitive to is how stocks react.

25:18And but conviction in A.I. uses going forward can can at different times go in different ways. Ultimately, we think they sink back, though. And I think we're looking at, you know, opportunistically here, I think still still a pretty, pretty encouraging A.I. playbook ahead. Yeah, that was sort of my takeaway, actually, by the way, at the Citigroup TMT conference last week as well. The trains left the station. It's not going back. Scott Kronert, thank you. When we come back this morning, much more on the so-called key man risk for the AI trade, what the future holds for Jensen Wong at NVIDIA. Later this hour, Oscar winner Gwyneth Paltrow on how she became an early open AI investor and a backer of many other Silicon Valley companies.

26:01Sarah's got that when Squawk on the Street continues. With the Discovered Cashback card, It's payback time when you earn cash back on everyday purchases. Activate and earn 5 % cash back at different categories each quarter on up to$1 ,500 in purchases. That's 5 % cash back at different places each quarter, like grocery stores, on gas, and at restaurants. It pays to discover. Terms apply. See discover.com slash 5 for details. Building a portfolio with Fidelity Basket portfolios is kind of like making a sandwich. It's as simple as picking your stocks and ETFs, sort of like your meats and other topics, and managing it as one big, juicy investment.

26:47Mmm, now that's pretty good. Learn more at fidelity.com slash baskets. Investing involves risks, including risk of loss. Fidelity Brokers Services, LLC. Member NYSC SIPC. The real cost of a break-in isn't your valuables. It's the feeling that your home stopped being safe. SimpliSafe keeps danger away from your family with three layers of protection. One, smart AI cameras and live U.S.-based agents help stop intruders before they break in. Two, we sound the alarm at points of entry. Three, our agents request emergency response. Plans starting around$1 a day. Right now, get 70 % off your new system with professional monitoring at simplisafe.com.

27:27Outdoor deterrence plans start at$49.99 a month. Visit simplisafe.com. Licenses for alarm license information. Back stocks rallying here in early trade, even as NVIDIA shaves around 50 points off of the Dow. The Nasdaq is up nearly two and a half percent. Three big movers were watching, including NRG, jumping after an earnings beat, also announcing an agreement to sell six natural gas-fired power plants for about$4 billion. Company planning to return a billion dollars to shareholders through buybacks and dividends. Berkshire more than doubling buybacks in the quarter as earnings do decline. The company buys back about$9.6 billion of its stock in Q3.

28:01That is more than double the amount from Q2. Earnings took a hit, though, as insurance underwriting and investment income declined. And Oppenheimer upping AMD to outperform. I-King estimates on the heels of earnings and a fireside chat they hosted with the CEO, or the CFO rather, saying they see favorable pricing trends as AMD negotiates some of those next generation deals. Wow, that's a significant move for AMD. Time for a CNBC News update. Julia Boorstin has that for us. Julia. David, President Trump's son-in-law Jared Kushner says the U.S. is determined to bring an end to the war between Ukraine and Russia.

28:36His comments come ahead of talks this week in the United Arab Emirates between Washington, Moscow and Kiev. Kushner says he and U.S. Envoy Steve Whitcoff will first meet with leaders from Ukraine and other European nations. A judge sentenced British comedian Russell Brand to 10 and a half years in prison today. A jury convicted him last week of raping one woman and sexually assaulting three others. The judge called Brand a sexual predator and said he will be eligible for parole after serving two-thirds of the sentence. And as Meta faces concerns about the safety of teens using Instagram, the TechDine is rolling out its AI age estimation technology globally.

29:15The company said in a blog post the move will put millions more users into its teen account settings, even if they registered as an adult when opening an account. Teen accounts have stricter privacy rules, restrict some content, and limit direct messaging. Back over to you. Okay, thank you, Julia. Julia Borson. When we come back, the risks pose to the entire AI trade as NVIDIA opens this investigation into CEO Jensen Huang over an affair with an alleged Chinese spy. Plus, next hour, do not miss Goldman Sachs CEO David Solomon, live from the company's Alternative Summit. We'll get to the impact of the midterms on the banking sector and much more.

29:50Stay with us. Welcome back. Like NVIDIA shares, you can see they're sitting out the rally today, although well off the lows of the session. The company has launched an investigation into its CEO, Jensen Wong's relationship with a businesswoman who intelligence agencies say is a Chinese spy. Let's talk to Gil Lurie. He's managing director at DA Davidson. Has a buy on the stock. Price target a lot higher than here at 300 bucks. Gil, give me the stock market side on this in terms of the risk it poses for NVIDIA and therefore its shares. Yeah, there's a couple of really big risks. One of them is what is the investigation going to find?

30:26Are there going to be conclusions about NVIDIA's sell of chips into markets in Asia that then funneled them to China? Are there going to be issues with NVIDIA selling chips to clouds in other parts of Asia that then provided compute to China? Is that going to limit NVIDIA's shares? That's one level of risk. The other one is that the investigation, if it concludes that Mr. Wong acted in bad faith, he could have to leave NVIDIA. And this is he is. Let's not forget the founder. Nineteen ninety three founded NVIDIA in 2006. They started using GPUs for AI. Ten years ago, he hand delivered the first set of GPUs to open AI, which was at that time Sam Allman and Elon Musk.

31:09Mr. Wong orchestrated the growth of AI, not just NVIDIA's success, but the growth of the entire industry. So that's a risk. And the risk in the short term is that there's going to be an overhang until we know what the results of the investigation will be. Yeah. Let's focus on Jensen. Obviously, you point out, co-founder of the company, has been its CEO, has a very flat structure, but he has a lot of direct reports, apparently, as many as 60 people report directly to him. Gil, I got to tell you, I mean, you know, he is at real risk here of losing his job, it would seem. We'll see. We don't want to prejudge any of this, but it's a real possibility.

31:49And so, I don't know, are you looking through the ranks of this company, trying to understand what leadership and who they have conceivably who would be able to take over? Well, that's what the company is going to have to do up until now. really in terms of facing the street, it's just been Jensen and Colette Crest. So they're now going to have to do the work as they conduct this investigation of trying to figure out what succession does look like in the event that Mr. Wong has to leave. And this is something they're going to have to be very open and communicate clearly to the street over the next few months, because again, that overhang will remain as long as there's an investigation.

32:23This is something that's very important for the board and for Mr. Wong himself to do, because he's a founder. He manages NVIDIA like a founder, which, as you described, means having a very large span of control, very key in terms of decision making. So that's something the company is going to have to absolutely do and communicate in order to assuage concerns by investors. Yeah. I mean, not to mention the congressional hearings already. Senator Elizabeth Warren is saying Congress gets back to work. It's going to be bipartisan. There are going to be a lot of questions. That can be an overhang too, Gil.

32:58How much of NVIDIA's success do you attribute to him? All of it, at least today. That's not to say that going forward, NVIDIA can't succeed with another CEO. It's a very well-constructed company with the best position in the market. So there are many other people that are qualified to manage NVIDIA. But again, we don't know who that person is, so they have to get to that point. But Jensen Wang built this himself. I know there were other co-founders, but to get to where they got today really is because Jensen Wang had a vision that GPU is an accelerator chip, has really broad functionality, starting with gaming, but then data centers in the old sense that we used to talk about for hosting applications, and then now for running AI.

33:48He's the one that had that vision. He's the one that made it happen. And again, he participate in the growth of the whole ecosystem. There are other CEOs that can lead it forward, but in terms of success today, he really deserves the credit. Gail, what about companies that the market is suspicious would need to lean on NVIDIA for support over time, either that's through circular financing or backstops? I mean, CoreWeave's up today, but I just wonder, is this bad for NeoClouds? Absolutely, because the decisions to invest in NVIDIA's customers were his decisions. They're very aggressive, bold decisions.

34:25They're part of the reason we have such a broad AI ecosystem, but they're not decisions that any CEO can make. So if somebody owns CoreWeave with the belief that, oh, NVIDIA is just a backstop, that becomes more challenging without Jensen Wang. because a CEO, not a founder CEO, a CEO that has more governance, more collaborative decision making, may not make the same decisions that Jensen Wang made over the years. Yeah. Meanwhile, Gil, just to end here, I mean, we do have the Nasdaq up about 2.3 percent, despite that decline in NVIDIA shares. A lot of the names you cover are actually having a very strong morning.

35:04Any thoughts overall? Yeah, absolutely. We overshot to the downside last week. We will continue to build data centers. The demand for AI is growing. We'll continue to build data centers next year and the year after that. We're going to have to build them differently. The companies that are deploying data centers are going to have to make them cleaner, quieter, less intrusive. And they're going to have to provide the localities and municipalities with incentives to allow data centers. And that mindset is going to have to change quickly for us to stay on track. But realistically speaking, the demand for AI is great.

35:38It's growing very quickly. We need those data centers, and we're going to keep building. All right, Gil, thank you. Appreciate it. Thank you. We were just talking about CoreWeave. The name does report tomorrow after the bell, and the options market is pricing in. Kind of a big move for the stock. We'll get details on that in just a minute. Welcome back to the market. Pricing in a big move for CoreWeave when it reports earnings tomorrow after the close. Let's get to Oliver Rennick at Seaboe Chicago. Talk about that. Maybe some VIX. Morning, Oliver. Hey, Carl. Much more positive tone in the options action surrounding CoreWeave this morning.

36:11Stock's up about 6 % ahead of earnings tomorrow. More than 76 ,000 contracts traded so far this morning. And it's about two-thirds calls versus puts. So two to one spread by volume, which is a sharp difference from trading last week, which ended Friday with near the highest put-to-call ratio in the stock all year. This morning, it looks like more than 23 ,000 calls were likely bought compared to just 6 ,000 puts bought. With one big call buyer purchasing 7 ,500, 100 strike calls expiring Jan 15th worth$375 ,000. That's a trade that needs core weave to more than double over the next six months.

36:53And at the same time, the most popular non-zero DTE trade this morning by premium, with a lot of volume behind it, was selling the 45-strike put expiring Friday. Those traders are betting the bleeding has stopped for now, with Corweave trading less than$5 above that strike they sold. The most important thing for traders right now, though, is probably just to be ready for a very big move. Market makers are pricing in more than 17 % swing for Corweave after its report, bigger than its typical 12 % move the past year, guys. Oliver, we mentioned the VIX getting back below 21. I also was curious about put-call ratios and whether or not we're getting some relief on that after last week.

37:39There's a lot of puts that now are showing up when you look at the open interest in SPY, Carl, after the action last week. blew out a lot of the positions that have been much closer to the money around that 740, 750. So as we hold that range, we're now building up a lot of puts that folks opened last week. So there should be more support. The biggest open interest in SPY below here is at 725. But with the rally today and with holding 740 on Friday, we are starting to see most of the puts and calls combined right here at 750. So this continues to be a pretty good pacification of the market over the last 24 hours of trading, I would say, Carl.

38:19OK, thank you, Oliver, for the setup on CoreWeave. When we come back, I sit down with Oscar winner Gwyneth Paltrow, how she has become an early open AI investor and backer of many other Silicon Valley companies opening up about her venture capital firm for the first time. We'll be right back. Welcome back to Squawk on the Street. While concerns around the AI build-out spooked the market last week, one longtime open AI investor is bullish as ever. We're talking about Oscar winner, entrepreneur, and venture capitalist Gwyneth Paltrow, who joined me at Citigroup's TMT Leadership Summit on Friday alongside her partner, Moj Madara.

38:51They're both co-founders at Kinship Ventures, which actually launched more than five years ago. They had not confirmed or talked about it until this interview. And they've been invested in open AI since 2023, really before ChatGPT blew up. So I started by asking Moj about the company's strategy and some of the bigger names it's invested in.

39:13We have raised outside money. We're midstream right now raising official fund one. But through the platform, we've deployed into notable deals like OpenAI, Nectar Social. We just invested in Travis Kalnick's company, Adams. We were lovable. We were lucky to be able to be a part of the cap table on OpenAI very early on. We've participated recently in Andrel investment. And so I think, you know, for us, again, it's been about the work. And I think, you know, when you're two emerging GPs right now, it's about demonstrating competency, honing your instincts and sort of drowning out the noise. And so that's really what we've been doing.

39:50How did the OpenAI investment come about? When did that happen? So I'm friends with Brian Chesky, luckily from Airbnb, who I love and who I met years ago in San Francisco. and he actually made the introduction for us with Sam. So we developed a relationship there. But really it was before like ChatGPT took over the scene. Yes, yes, yes. Yes, it was before. How did you know? I think I have, you know, my, I would say I don't like to toot my own horn, but I think I definitely have a gift for seeing around corners. I think you see that kind of in what I've done in the wellness space, kind of creating TAM and lots of different areas.

40:31And I just think I have that sense for where things are going, what the consumer is curious by and going to become curious by. And so that was, I mean, several years ago. Would you invest in a new round in OpenAI at this valuation? I think that they're a hugely impressive company. I think that there's still more opportunity for growth there. I think their enterprise performance has been outstanding, especially this past quarter. I think Sam is an incredibly tenacious, impressive entrepreneur and founder. If you look at his track record in social, if you look at what he did through Y Combinator, he'll probably tell you that I bothered him to death to get into that early round.

41:09Because I think you could tell that sort of the world was ready for consumer agentic products. And it's pretty clear that Sam understands how to productize that both for consumer and enterprise. So we're bullish on Sam and OpenAI. Yeah. How has it shaped how you think about AI in general and picking other winners? You said you're in Lovable as well. Yeah. I mean, I think, look, it's a it's a it's a topic that is kind of at every dinner table and every boardroom across the nation right now. I think the consumer is concerned about it and also intrigued by it. I think that they're like the the train has left the station.

41:48This technology is here. It's here to stay. And so I'm really focused on the ways in which it can help women make their lives better. Moms, you know, from a health care perspective, from an efficiency perspective, I just think there's a lot of opportunity with the technology. And I understand the fear around it as well. But I feel like in our lives, we're not seeing it sort of disrupt and erase jobs in the way that I think people are fearful of. I think it's for us right now, it's really causing an incredible amount of efficiency within Goop, within Kinship, within the spaces that we work. So I feel excited about it.

42:24I think they, you know, always the environmental issue, the impact environmentally is something that they're going to continue to work on. And I think you see them making progress there, like with water usage and things like that. So just if they understand, like, what is on top of mind for the consumer, I think it just has to be adjudicated carefully. I do wonder if you have to explain to your Hollywood community and crowd. I feel like there's a lot of fear and concern about AI replacing their jobs or devaluing them. You know, I think that that it's it's understandable, right? When you see, you know, a movie created out of AI and you think, oh, my gosh, you know, what's going to happen to my job?

43:01But for me, I still do not see AI replacing any human aspect of anything. Like, the more I see a fake video, the more I want, you know, a film like that I just saw last week on La Bola Negra, like a beautiful artistic expression of, you know, coming from the heart, coming from the minds of artists. So I don't I think it makes, you know, art that's not going to move culture and expand our minds and hearts and souls yet. So I don't think that will ever be replaced. I really don't. A glimpse of our conversation, Gwyneth Paltrow and Moj Madara, who, I mean, they both are founders themselves. I asked Gwyneth at one point, you know, is it just getting a celebrity name on the cap table?

43:42Is that what this is about? And that's not at all. I mean, they're both, they say, are very active in terms of working with their founders in helping them open doors, for instance. So Moj's background is she did BeautyCon, which was a big, obviously, beauty media and event kind of company. And then with Goop and Gwyneth Paltrow, they have a lot of connections in the health and wellness space, in the consumer space. They connect companies, they were saying, like Lovable to Procter & Gamble, where they have relationships. They host dinners. Gwyneth famously was going to host Sam Altman for a Hamptons dinner, those sorts of things.

44:16And then they're active founders, they say, that they've been battle-tested. And so they, you know, they're they say that they're very involved and they're very strategic when it comes to some of these some of these investments. I mean, listening to the conversation about Hollywood, I'm always reminded of David's chat with Ben Affleck back in the day, who wasn't a doomsdayer, but said, if you're post-production special effects CGI, I mean, that laborious work. Yeah, it's very vulnerable. Yeah, he did. And in fact, he's already benefited from that. the company that he actually already started and I believe sold in part to Netflix around that.

44:50At the same time, he did say positive things, as Gwyneth said, about the creative process itself and believing, I think. And I think if I caught up with Ben, he would still be saying the same thing. I did see him since then a couple of times and he more or less still seems to. We're going to get skydanced tonight, where a lot of this is about efficiencies through technology. We are going to need to deliver on a lot of efficiencies. I would note the stock is up nicely this morning, but$6 billion in synergies doesn't happen out of nowhere. So we'll get an update, an important one at least for the media industry.

45:21I mean, as for this conversation, my takeaway is I didn't realize how many big investments and early investments she was in. You know her kind of from Goop, not to mention she's an actress, and she's expanding that with Goop Kitchen and Gwen, her clothing line. But she was an early investor in Uber, in Sweetgreen, in Aura, the ring. She said that was one of her best investments ever, was in there early. So sort of using her health and wellness background and what she's built to become a pretty, you know, pretty interesting venture capitalist. Yeah. Well, Aura got delayed, right? All the Sweet Greens rallied quite a bit off of the lows.

45:57Yeah, I think she was in early on both of those, and they've been home runs for them. Fascinating chat. All opinions expressed by Squawk on the Street participants are solely their opinions and do not reflect the opinions of CNBC or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet, or another medium. You should not treat any opinion expressed on this podcast as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. Such opinions are based upon information Squawk on the Street participants consider reliable, but neither CNBC nor its affiliates and or subsidiaries warrant its completeness or accuracy, and it should not be relied upon as such.

46:33To view the full Squawk on the Street disclaimer, please visit cnbc.com forward slash Squawk on Street Disclaimer. This episode is brought to you by Schwab Market Update, an original podcast from Charles Schwab. Schwab Market Update, an original podcast from Charles Schwab, provides an information-packed daily market preview on stock updates, U.S. and global economic news, monetary policy decisions, and key results and statistics that may impact your trading. Download the latest episode and subscribe at schwab.com slash marketupdatepodcast, or find Schwab Market Update wherever you get your podcasts.